Berlusconi implored to resign after vote humiliation

Former political allies abandon Italian PM leaving his future in doubt.

Silvio Berlusconi is facing intensified calls to offer his resignation after losing the confidence of the Italian lower house of parliament. The House voted through last year's budget by 308, with the opposition abstaining. However Berlusconi would need an absolute majority of 316 in order to survive a confidence vote, which will likely now be tabled by the opposition. Prior to the key vote, the PM appealed to rebels within his own party to offer their support, though the outcome of the vote indicates they may now be abandoning him altogether.

Both Pier Luigi Bersani, leader of the main opposition Democratic Party, and coalition ally Umberto Bossi, head of the devolutionist Northern League, have now called for Berlusconi's resignation after fears his weakened position will pile insurmountable pressure on the Italian economy. The cost of government borrowing rose on Tuesday to record highs, in a sign that the markets are attacking the fragile Italian economy and making borrowing unsustainably expensive.

The market reaction following the vote is not yet clear, as doubts remain over Berlusconi's future. Earlier this week he had vehemently denied reports of his impending resignation but is now consulting senior aides and head of state Giorgio Napolitano on his next move. The PM is already facing a raft of allegations of sleeze and corruption and of paying for sex with a 17-year-old belly dancer.

Defence Minister Ignazio La Russa said all options remained open, adding that the government would issue a statement in the following hours. Even if Berlusconi were to step aside, there is no guarantee that painful austerity measures will be implemented quickly enough to calm fretful markets. A lack of political unity means that the formation of a grand national coalition would be an unlikely outcome, and the centre-left opposition has argued that a technocratic cabinet -- free from political bias -- would be needed to implement painful austerity measures that would hamper the electoral chances of any political party.